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2013 Best

Practices Study

Agencies

with

Revenues

Over

$25,000,000

185

Analysis of Agencies with Revenues Over $25,000,000

Key Benchmarks

Mgmt. Perspectives

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Average

+25% Profit

+25% Growth

The NUPP

Expressed as a percentage of Net Revenue, the NUPP is the

difference between what an agency pays its unvalidated

producer(s) and what the producer(s) would earn under the

agency’s normal commission schedule. A NUPP of 1.5% is

considered a healthy level of investment.

1.2%

0.6%

1.1%

High

3.6%

Low 0.1%

One of the most important investments an agency can make in organic growth is in the hiring and

developing of new producers. By measuring

pure payroll costs

, the NUPP benchmark allows an “apples-to-

apples” comparison with other agencies regarding the amount of direct investment an agency is making

in new producers. The NUPP benchmark is intended to be simple and is not designed to measure all other

ancillary expenses that accompany the hiring and developing of new producers.

While the NUPP provides a general investment guideline, an agency should also consider the success

rate of its new producers, i.e. the percentage of new producers hired during the past 5 year period that

have achieved the sales goals set before them. By multiplying the NUPP by the producer success rate, an

agency can further determine the effectiveness of its NUPP. High performing agencies typically achieve an

Effective NUPP between 1.0% - 1.5%.

An unvalidated producer is one whose production does not yet cover his/her wages

Net-investment in Unvalidated Producer Pay

Understanding the NUPP